WS Atkins hit by oil downturn but hopes for Trump infrastructure boost

Company reports fall in half year profits but maintains full year guidance

Atkins worked on the Burj Al Arab Hotel in Dubai Photograph: Rosemary Calvert/Getty Images

Increased infrastructure spending in the US and UK could boost business at consultancy group WS Atkins, the company said, even as its profits were hit by tough markets for its oil and gas division.

Half year pretax profits fell 58% to £22.4m, partly due to a £23m write-down of North American oil and gas outlets.

But its UK and other US businesses performed well, and it has kept its outlook for the year unchanged. And it is looking forward to next week’s Autumn Statement, and more details on US president-elect Donald Trump’s spending plans. Chief executive Uwe Krueger told Reuters:

There is a strong intent by the governments, be it the new administration of president-elect Trump or be it here in the UK, to continue to be steadfast or even significantly increase investment into infrastructure...and that plays very much to our strengths.

However the profit fall has seen Atkins’ shares lose nearly 2% to £16.28. Analysts at Numis were still positive:

In-line interims and an unchanged outlook mean that we leave forecasts unchanged. As previously stated, the better performing businesses have continued to do well (UK, North America) while Middle East and oil & gas have faced headwinds. Looking medium term, management references government commitments and a need for infrastructure spending (UK, US), and we note strong recent peer group share prices, particularly post Trump... Applying a peer group 2017 multiple to our 2018 forecasts, we raise our target to 1900p from 1710p.

Among the mid-caps, AA has accelerated 5.4p to 259.8p after it unveiled a bond exchange package which should reduce interest costs and enhance its credit profile. Liberum analysts said:

The cash interest saving may mitigate any potential increase in the pension deficit recovery payments from the current level of £14m as a result of the triennial review, which management expect to see shortly, with agreement expected before June 2017 (noting the £622m IAS 19 deficit at the interims). Management is looking at ways of mitigating any impact from the increase in deficit.

We leave our estimate unchanged at this stage... From a P&L perspective, we can see a £5m charge in 2017 and a £5m benefit from 2018 onwards. From a cash flow perspective there are £20m of up front costs, but £40m of interest savings over 5 years (£8m x5).

Lower down the market, eSports company Gfinity has jumped 8% to 11.25p after it launched a new eSports league format, Gfinity Elite Series. Analyst David Johnson at its broker Allenby Capital said:

The series will generate sponsorship and broadcasting rights for Gfinity [and] represents a major investment for Gfinity and commercialisation is at a very early stage. As a result we are suspending our forecasts until proof points start to emerge.

Gfinity has demonstrated its ability to successfully stage high quality arena-based and smaller online events and built relationships with publishers, broadcasters, sponsors and players. The Elite Series represents the next level and enables Gfinity to capitalise on its reputation and a substantial opportunity.

Finally, another new entrant to the Aim market will make its debut at the end of the month.

Cosmetics group Warpaint London, whose flagship brand is W7, has raised £23m in a placing and is expected to join the market at 97p a share, valuing the business at £62.6m. The move will allow the company to raise its profile and get access to capital, as well as enabling it to use paper for potential acquisitions. The company is profitable, with half year earnings increasing from £2.6m to £3.3m.